Suppose a company charges an annual premium of $110 for an insurance policy for minor injuries. Actuarial studies show that in case of an injury claim, the company will pay out an average of $900 for outpatient care and an average of $3000 for an overnight stay in the hospital. They also determine that, on average, each year there are five claims made that result in outpatient care for every 1000 policies and three claims made that result in an overnight stay out of every 1000 policies. What is the expected annual profit of an insurance policy for the company?

Suppose a company charges an annual premium of $110 for an insurance policy for minor injuries. Actuarial studies show that in case of an injury claim, the company will pay out an average of $900 for outpatient care and an average of $3000 for an overnight stay in the hospital. They also determine that, on average, each year there are five claims made that result in outpatient care for every 1000 policies and three claims made that result in an overnight stay out of every 1000 policies. What is the expected annual profit of an insurance policy for the company?

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Description: Suppose a company charges an annual premium of $110 for an insurance policy for minor injuries. Actuarial studies show that in case of an injury claim, the company will pay out an average of $900 for outpatient care and an average of $3000 for an ove

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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